Tennessee Valley Authority, Knoxville, has proposed freezing its cash balance pension plan and moving current employees to the 401(k) plan, spokesman Jim Hopson said.
The proposal “caps” the cash balance pension plan, according to Mr. Hopson, which was established for employees hired on or after Jan. 1, 1996, and closed to new hires on July 1, 2014, and moves those employees to a 401(k) plan. The current 401(k) plan has $1.9 billion in assets.
Under the proposal TVA would contribute 6% of an employee's salary and then match 100% of employee contributions up to 6% of salary, Mr. Hopson said. TVA would then contribute $275 million per year to the cash balance plan for about 20 years, which Mr. Hopson said the staff calculated would be the amount of time it would take to fully fund the plan.
The proposal by the TVA staff must be approved by the board of the TVA Retirement System, and then approved by the TVA board of directors. Mr. Hopson said a date for the move to the 401(k) plan from the cash balance plan would be part of those negotiations.
As of Sept. 30, pension assets totaled $6.8 billion, and projected benefit obligations totaled $12.8 billion, for a funding ratio of 53.1%, according to TVA's most recent 10-K filing.